Fineotex revenue jumps 169%, but margins fall

FCL Fineotex Chemical Limited (FCL) reported a 169.1% year on year increase in consolidated revenue in Q2 FY27 to ₹387.65 crore. But operating EBITDA grew at a much slower 92% to ₹59.59 crore. Net profit increased 70.8% to ₹44.55 crore. That gap is what deserves attention. Operating EBITDA margin fell to approximately 15.4%, compared with around 22.5% a year ago. A major reason behind the change in scale is Fineotex's acquisition of a 53.33% controlling stake in US based CrudeChem Technologies Group. The acquisition adds more than 100 engineered chemical solutions and expands Fineotex's presence in oilfield chemicals. The company also has manufacturing operations in Texas. This gives Fineotex access to a much larger international market. But the real test is whether the expanded business can deliver stronger margins and returns. There is another development worth watching. Fineotex is building a US water and wastewater solutions business targeting data centres and semiconductor facilities. My view: The acquisition has clearly changed the company's revenue profile. However, I would not judge this expansion by revenue growth alone. I want to see whether EBITDA margins stabilise, cash generation improves and the acquired business contributes meaningfully to profits. My stance: The growth opportunity is interesting, but integration and profitability matter more than the headline 169% revenue growth. Disclosure: I do not hold this stock.